This information was prepared in accordance with European Regulation (EC) 1606/2002 on the application of international accounting standards dated July 19, 2002. The Group’s consolidated financial statements for the year ended December 31, 2017 were prepared in accordance with IFRS (International Financial Reporting Standards) as published by the International Accounting Standards Board (IASB), and endorsed by the European Union.

The accounting standards applied in the consolidated financial statements for the year ended December 31, 2017 are consistent with those used to prepare the consolidated financial statements for the year ended December 31, 2016.

Standards, interpretations, and amendments applicable for the first time in 2017

No new standards, interpretations, or amendments that have a material impact on the Group’s consolidated financial statements have become applicable for the first time in 2017.

For the year ended 2017, in accordance with the amendments to IAS 7 Statement of Cash Flows that are part of the IASB’s Disclosure Initiative, the Group provided disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (see note F33 Net indebtedness).

Standards, interpretations, and amendments applicable for the first time in 2018

No new standards, interpretations, or amendments applicable for the first time in 2018, are expected to have a material impact on the Group’s consolidated financial statements.

IFRS 15 Revenue from Contracts with Customers (applicable for annual periods beginning on or after January 1, 2018). On January 1, 2018 the Group adopted IFRS 15, using a modified retrospective application.

IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard supersedes all current revenue recognition requirements under IFRS. During 2017, the Group finalized its assessment of IFRS 15 impacts that it had commenced in 2016.

  1. Sale of goods: As the Group is in the business of selling chemicals, contracts with customers generally concern the sale of goods. As a result, revenue recognition generally occurs at a point in time when control of the chemicals is transferred to the customer, generally on delivery of the goods. In preparing for IFRS 15, the Group considered the following:
    1. Distinct elements: The revenue of the Group consists mainly of sales of chemicals, which qualify as separate performance obligations. Value-added services – mainly customer assistance services – corresponding to Solvay’s know-how are rendered predominantly over the period that the corresponding goods are sold to the customer. Ancillary services, such as training, are not material. At transition date, the Group does not have a more than insignificant adjustment compared to its current practice.
    2. Variable consideration: Some contracts with customers provide trade discounts or volume rebates. Currently, the Group recognizes revenue from the sale of goods measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, and volume rebates. Trade discounts and volume rebates give rise to variable consideration under IFRS 15, and are required to be estimated at contract inception. IFRS 15 requires the estimated variable consideration to be constrained to prevent overstatement of revenue. The Group assessed individual contracts to determine the estimated variable consideration and related constraints. At transition date, the Group does not have a more than insignificant adjustment compared to its current practice on its retained earnings. As from 2018, the liability for expected future rebates will be presented as part of contract liabilities.
    3. Moment of recognition of revenue: The Group sells its chemicals to its customers, (a) directly, (b) through distributors, and (c) with the assistance of agents. The Group analyzed whether the moment control of the goods passes, as described in IFRS 15, would result in a different moment to recognize the revenue. At transition date, the Group does not have a more than insignificant adjustment compared to its current practice.
  2. Presentation and disclosure requirements: IFRS 15 provides presentation and disclosure requirements, which are more detailed than under current IFRSs. The presentation requirements represent a change from current practice and increase the volume of disclosures required in Group’s financial statements. Many of the disclosure requirements in IFRS 15 are new. The Group has analyzed those disclosure requirements, including the need for policies, procedures, and internal controls necessary to collect and disclose the required information.

IFRS 9 Financial Instruments (applicable for annual periods beginning on or after January 1, 2018). IFRS 9 brings together all three aspects of the accounting for the financial instruments project: classification and measurement, impairment, and hedge accounting. Except for hedge accounting, retrospective application is required, but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group adopted the new standard on January 1, 2018, and did not restate comparative information. During 2017, the Group finalized the impact assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018. Overall, the Group expects no significant impact on its statement of financial position and equity. The Group expects an increase in the loss allowance resulting in a negative impact on equity as discussed below. In addition, the Group will implement changes in classification of certain financial instruments.

  1. Classification and measurement: The application of the classification and measurement requirements of IFRS 9 does not have a significant impact on the Group’s consolidated statement of financial position or equity. It will continue measuring at fair value all financial assets currently held at fair value. The equity shares in non-listed companies, currently presented as available for sale, are intended to be held for the foreseeable future. The Group expects to apply the option to present fair value changes in OCI, and therefore the application of IFRS 9 does not have a significant impact. The fair value gains or losses accumulated in the other comprehensive income will no longer be subsequently reclassified to profit or loss, which is different from the current treatment. This will not have an impact on the Group’s comprehensive income for the year. Loans as well as trade receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. Thus, the Group will continue to measure those financial assets at amortized cost under IFRS 9.
  2. Impairment: IFRS 9 requires the Group to recognize expected credit losses on all of its trade receivables: the Group will apply the simplified approach and recognize lifetime expected losses on all trade receivables, using the provision matrix in order to calculate the lifetime expected credit losses for trade receivables as required by IFRS 9, using historical information on defaults adjusted for the forward looking information. Impacts related to debt securities, loans, financial guarantees, and loan commitments provided to third parties, as well as cash and cash equivalents, are immaterial. The impact on the Group’s equity amounts to €(5) million.

In € million


(a) Trade and other receivables


(b) Assets held for sale


(c) Subtotal (a)+(b)


(d) Deferred tax assets


(e) Deferred tax assets included in assets held for sale


(c)-(d)-(e) Impact on retained earnings


of which NCI


  1. Hedge accounting: In accordance with IFRS 9’s transition provisions for hedge accounting, the Group applies the IFRS 9 hedge accounting requirements prospectively from the date of initial application on January 1, 2018. The Group’s qualifying hedging relationships in place as at January 1, 2018 also qualify for hedge accounting in accordance with IFRS 9 and were therefore regarded as continuing hedging relationships. No rebalancing of any of the hedging relationships was necessary on January 1, 2018.

Standards, interpretations, and amendments applicable for the first time after 2018

IFRS 16 Leases (applicable for annual periods beginning on or after January 1, 2019). IFRS 16 sets out the principles for the recognition, measurement, presentation, and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model, similar to the accounting for finance leases under IAS 17. The Standard includes two recognition exemptions for lessees: leases of low-value assets and short-term leases, i.e. leases with a lease term of 12 months or less. At the commencement date of a lease, lessees will recognize a lease liability (i.e. a liability to make lease payments), and a right-of-use asset (i.e. an asset representing the right to use the underlying asset over the lease term). The right-of-use asset will be depreciated over the term of the lease, and interest expense will be recognized on the lease liability. The lease liability will be remeasured upon the occurrence of certain events (e.g. a change in the lease term, a change in future lease payments resulting from a change in index). Such remeasurements of the lease liability will generally be recognized as an adjustment to the right-of-use asset. Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17. Finally, disclosure requirements under IFRS 16 are more extensive when compared with IAS 17.

As part of its implementation project of IFRS 16, in 2017, the Group undertook a review of its operating lease contracts with a focus on the entities with the highest future minimum lease payments. The Group also challenged the non-cancellable period of the leases, especially for buildings.

During 2018 the Group will continue to assess the impacts of IFRS 16 on its consolidated financial statements. The Group expects an impact mainly on leases currently classified as operating leases and for which Solvay is the lessee. In this respect, we refer to note F24 Leases for more information on existing operating leases. The Group expects to apply IFRS 16 using the modified retrospective approach and to exclude services from its lease liabilities.

IFRIC 23 Uncertainty over Income Tax Treatment. The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Incomes Taxes and does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:

  • Whether an entity considers uncertain tax treatments separately,
  • The assumptions an entity makes about the examination of tax treatments by taxation authorities,
  • How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, and
  • How an entity considers changes in facts and circumstances.

An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. The interpretation is effective for annual reporting periods beginning on or after January 1, 2019, but certain transition reliefs are available. The Group will apply the interpretation from its effective date. The Group operates in a complex multinational tax environment, and is currently assessing the impact of the Interpretation on its consolidated financial statements, including presentation.

Other standards, interpretation, and amendments applicable for the first time after 2018 are not expected to have a material impact on the Group’s consolidated financial statements.